Best utility stocks in Canada to buy amid volatility: CU, AQN & FTS

 Utility stocks can be a useful addition to an investment portfolio to diversify risk and produce stable cash amid current volatility. These stocks might come in handy due to rate-regulated activities and the ability to produce predictable cash flows.

Highlights

· Utility companies provide necessary services like natural gas distribution and power transmission.

· Utility stocks might come in handy due to rate-regulated activities.

· Canada’s inflation rate soared to a record high in about 40 years after it increased to 7.7 per cent.

Additionally, utility companies’ low-risk operation and solid earnings foundation underpin their dividends and reduce their volatility.

Utility companies provide necessary services like natural gas distribution and power transmission. Most of these businesses are well-established, with deep roots in the market.

Hence, during times of rising inflation, these companies are expected to continue their business operations as usual. Consumers avail the services of utility companies as they are essential. Recently, Canada’s inflation rate soared to a record high in about 40 years after increasing to 7.7 per cent in May.

We have compiled a list of the Best utility stocks in Canada Let’s look at them:

Canadian Utilities Limited (TSX:CU)

It is a subsidiary of Atco, which had recently announced that it would construct two hydrogen production and fueling stations. Canadian Utilities distributes electricity and gas services.

In Q1 2022, the adjusted earnings of the utility company were C$ 219 million compared to C$ 191 million. Canadian Utilities said it invested C$ 263 million in capital projects.

The company had paid a quarterly dividend of C$ 0.44 per unit on June 1; its dividend yield is 4.7 per cent.

Fortis Inc. (TSX:FTS)

It is among one of the largest utility service providers in Canada and reportedly serves over 3.4 million customers. Fortis has a network of over 16,000 miles of high-voltage transmission lines.

Fortis’ first-quarter net earnings were C$ 350 million, and the company said it was on track with capital investments for this year.

In 2021, the company’s revenue was C$ 9.4 billion, and the total assets stood at C$ 58 billion as of March 31, 2022.

Fortis is a large organization that houses 9,100 employees and operates in several countries. The company’s return on equity is 7.2 per cent, and its dividend yield was 3.6 per cent at the time of writing.

Algonquin Power & Utilities Corp. (TSX:AQN)

It is a diversified utility company that pays regular dividends to its common shareholders. On May 12, Algonquin had announced a six per cent dividend increase for the common shares.

The company’s finances remained strong in the first quarter as its revenue increased to US$ 735.7 million, up by 16 per cent year-over-year (YoY). Meanwhile, the adjusted EBITDA increased by 17 per cent YoY to US$ 330.6 million.

Notably, the adjusted earnings of Algonquin jumped by 13 per cent from the first quarter of 2021 to US$ 141.3 million. In Q1 2022, the company’s cash provided by operating activities recorded a huge surge of 168 per cent YOY and amounted to US$ 166.2 million.

Please note, the above content constitutes a very preliminary observation or view based on digital trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.